MICROSOFT LEAKS ARCADE PLANS

REDMOND, WA - (Posted March 7) Eighteen months after Microsoft and Sega announced their intent to create arcade versions of the former's Xbox console system, the joint project is now moving close to launch, according to press reports. Microsoft's Xbox division is said to be preparing an arcade system under the code name "Chihiro." Not so coincidentally, "Chihiro" happens to be the name of Sega's new Xbox-based coin-op hardware system, launched in late 2002 with "House of the Dead III." But the new Microsoft plan apparently calls for a second arcade system that would be marketed under the Xbox brand name. The San Jose Mercury News quoted a Microsoft official as saying, "We think that the arcade business shows some signs of revival, particularly in Japan." The timing of this news leak is curious, since Sega publicly announced in recent days that it is not interested in being acquired by Microsoft. Sega executives continue to insist they are on track with plans for a merger later this year with Sammy Corp.